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Worldwide, companies are increasingly using algorithms and artificial intelligence (AI) in order to power their operations, from product development to manufacturing and marketing, and product pricing is no exception. This new type of information system based on learning algorithms has drawn considerable attention in an effort to understand its societal effects (Lysyakov and Viswanathan 2023 ; Lu and Zhang 2024 ; Fügener et al. 2021 ). An important question within this broader context is how learning algorithms are used for pricing (Brackmann et al. 2024 ). Algorithmic pricing is a practice where software agents automatically determine prices for items for sale, in order to maximize the seller’s profits. This practice is increasingly common in online retail markets. Chen et al. ( 2016 ) estimated that, by 2015, algorithms were used to set prices for roughly one-third of the top 1,600 products on Amazon. By 2018, the average product price on Amazon reportedly changed every ten minutes în order to adapt to market conditions. Footnote 1 Since then, an industry has developed around automated pricing software.
Bichler et al. (Mon,) studied this question.